Market Buzz: Worries over US stimulus future and Chinese growth

Russian investors are expected to get little domestic drive on Monday. Internationally, developments around the US stimulus program and concerns over a credit squeeze in China will prevail during the week.

“I think, the Russian market will start a trading session on
July 8 next to to its closing levels of Friday,” and it will
be moving sideways during the rest of the day, according to
Ekaterina Kondrashova of Investcafe.

Given that little macroeconomic stats are expected, Russian
floors are likely to watch international markets, Kondrashova
added.

After a robust start on Friday Russian stocks finished the day
lower. The RTS lost 0.94 percent to 1,268.59, with the MICEX
going down 0.48 percent to 1,342.72.

Asian markets slid in Monday trading on concerns of an economic
slowdown in China and a cut in government stimulus in the US.
Hong Kong's Hang Seng Index dropped 2.4 percent and the Shanghai
Composite lost 1.9 percent on the mainland. Monetary authorities
in China are now cutting lending, worrying it could race out of
control. Such a cash squeeze could cut the country’s credit
growth by $122 billion in 2013, according to the estimates by
Bloomberg analysts.

“The biggest concern is whether this will lead to a
de-leveraging cycle where lending and borrowing become more
difficult and then the economy slows dramatically into the later
part of the year,” Hans Goetti, Singapore-based chief
investment officer for Asia at Finaport Investment Intelligence,
told Bloomberg TV. “The tapering by the Fed has become much
more of a reality after the jobs report.”

An opening of the corporate reporting season in the US will be
one point of investor attention this week, as market players seek
to get any signs of economic improvement since the Federal
Reserve said it could ease up on its stimulus at the end
of 2013. In the framework of the bond – buying
programme, the US government pumps $85 billion into its
economy.

Alcoa will be the first to show its second – quarter financials
on Monday. Other companies to report later this week include Yum
Brands, JPMorgan Chase, as well as Wells Fargo.

Among other economic events that could give investors a hint of
the possible action by the US Fed are the minutes from the
Federal Open Market Committee (FOMC) to be released on Wednesday,
as well as data on consumer credit, the Treasury budget, Michigan
sentiment and Producer Price Index.

On Friday, all three US stocks finished trading on an upbeat
note, buoyed by better payroll figures. The Dow Jones Industrial
Average and the S&P 500 both rose more than 1.5 percent
during the week, while the Nasdaq was up more than 2 percent. The
number of people with a job in the country increased by 195,000
in June, according to the Labor Department. The figure compares
to the Bloomberg median forecast of a 165,000 gain.

In Europe, stocks finished lower on Friday, as weak factory order
numbers in Germany disappointed.

Orders from the euro zone unexpectedly fell by 3.9 percent during
May, in a sign that recovery in Europe’s largest economy may be
disrupted. The British FTSE 100 lost 0.72 percent, German DAX
went 2.36 percent lower and French CAC slid 1.5 percent.